The Rise of the COO Role

Recap of my fireside chat with Tomasz at Redpoint

I was excited and also somewhat shocked to discover that my Office Hour with Tomasz Tunguz at Redpoint Ventures last week was their most highly attended one ever! As much as I'd love to personally take full credit for that, I think the attendance spoke to the rising need for the COO role, which was the subject of our fireside chat. People are wondering, what's causing that rise, and how can CEOs recruit a top-notch COO, even as competition for top talent increases?

This blog post describes my thoughts on those questions and more. If you want to learn more detail about what Tomasz and I discussed in our fireside chat, this blog post will help. Also, look out for Tomasz’s upcoming blog post summarizing his takeaways. In a later post, I'll plan to cover related topics, including how operators can navigate their own career path to COO. You can subscribe to my future posts here:

WHY the COO role has been on the rise

What's the primary tailwind behind the growth in the COO role? Technical founders are staying in their roles as CEO for much longer. At least three factors have contributed to this trend:

  1. The rise of the product’s importance to a company’s trajectory. People expect the same usability from their enterprise products as they do from their consumer ones. In addition, product-led growth strategies have risen in popularity.

  2. The shift in power to founders. Capital is abundant. Founders suffer less dilution, and sometimes secure disproportionately high voting shares. Every VC fund talks about being “founder-friendly."

  3. VCs/boards have realized how disruptive it can be to a company to remove the person who inspired its raison d’être.

As a result, it’s extremely rare to hear about a founder being replaced with someone who a decade ago might have been called a “professional CEO". There's a new consensus that it's a good idea to help the founder stay in their leadership role, which -- at least in my opinion! -- is a very positive development.

In parallel, there has been a rise in the need for certain non-technical skill sets, due to at least four trends:

  1. Cross-functional coordination across go-to-market. In a fast-moving SaaS company (especially one with a product-led or bottom-up growth model), you can’t have marketing, sales, and customer success operating in silos. You need someone who is a systems thinker enabling collaboration across all of them.

  2. Decline in the vision of the company as a hierarchical, vertically structured organization. Employees and their managers value collaboration and "upward" input more. Managing an organization takes a lot more effort and skill than it used to. Especially during these "challenging times" (to use a common catch phrase), teams need bear hugs from their leaders. 

  3. Companies are growing faster than they used to -- but people still need effective change management along the way.

  4. Emergence of data as a central asset within companies. There needs to be not only one source of truth for data but also a leader who can help align the company around a course of action that’s based on that data. 

These all imply the need for certain skill sets that some technical founders haven’t spent time honing -- including:

  • customer-facing experience,

  • gaining broad-based buy-in among employees for initiatives,

  • resolving conflict among diverse stakeholders,

  • handling employee concerns,

  • creating an effective OKR process.

When a founder realizes they need to complement themselves in that area, they often hire a COO of some type. 

WHAT type of COO to hire

The COO title is among the most ambiguous of exec titles. That's because unlike other roles the COO role is inherently defined by the needs of the particular CEO, which of course vary by CEO and by stage of company. The COO must be a complement to the CEO.

I've found that there are four common types of COOs and described those in an earlier post. Briefly, those types are:

  1. Chief of Staff: When you as CEO need an extension of yourself to drive special projects.

  2. Operations Lead: When you need greater cross-functional glue. Similar to a "CFO-plus."

  3. Journey Officer: When you need a more coherent customer journey and consistency of approach across marketing, sales, and customer success. Could have the title Chief Revenue Officer (CRO).

  4. Runs the Biz: When you want to focus on the product, evangelism, and vision of the company. This COO type manages many diverse functions and may have the President title.

In general, though, you can think of the CEO-COO pair as a dynamic duo -- not too different from Tina Fey and Amy Poehler in the movie Sisters, which I watched last weekend. (I'll let you decide who is CEO and who is COO.) The point is, they complement each other.

Focus on that complementary when you're deciding what type of COO you want to hire. Base your decision on your particularities as a founder/CEO and where you want to spend your time. I once learned from a smart person that you should spend your time at the intersection of:

  • What you’re strong at relative to other people. Your superpowers.

  • What energizes you. Fascinatingly, this category is often overlapping but not the same as your strengths. For example, I'll bet that most of us are quite capable at doing some things we don't enjoy.

  • What your environment needs from your company. Your environment consists of your team, your clients, your investors, your market. You have to fulfill their needs, but you may not be good at it or energized by it all the time.

Try to delegate everything that’s in the “environmental needs” category that isn’t a match for both your strengths and energy sources. A COO can be super helpful in inheriting many of the responsibilities that you want to delegate. It may be worth thinking through, which of the four types of COOs above best matches the set of responsibilities that you want to delegate?

WHEN to hire one

Per above, the prompt for creating some type of COO role is you (the CEO) realizing that you personally need help leading the company. Here are some comment moments of realization:

Series A: Around this time, you'll find it extremely helpful to have a Chief of Staff (Type #1) to work on special projects. You have revenue, customers, and a team. There's a lot going on, you're being pulled into many issues and opportunities, and you want help tackling those.

Between Series A and B, you're usually looking to design your go-to-market playbook — i.e. all the assets across the customer journey — and find it helpful to have an early, generalist GTM leader. Call this role an "Early-Stage Journey Officer" (an early-stage version of COO Type #3). They might have started in a Chief of Staff role. Examples of this type of GTM generalist include:

  • Will Robins at Monte Carlo: his title says Customer Success but he has worked across a wide range of GTM functional areas over time.

  • Jen Ong Vaughan at Assembled: she was the first go-to-market person and built the sales and customer success teams, which she continues to lead.

  • Salman Kothari at Mux is now the COO but previously was in a generalist role of Head of Operations and Strategy and worked across go-to-market.

Initially this Early-Stage Journey Officer may be a team of one, or they may lead a small generalist go-to-market team, but their role could evolve into a full Journey Officer role over time, overseeing all specialized GTM functions across marketing, sales, and customer success.

In parallel during this stage, you may want an Operations Lead (Type #2) to help you manage the staff functions, which most likely include Finance, People, and Biz Ops (which often covers OKRs, reporting, and board meeting prep).

Series B+: In the later stages, you're typically looking for an experienced leader of multi-function teams to scale the go-to-market playbook that you defined earlier. Examples of these leaders include Steph Carullo (COO at Box), Christina Kosmowski (President at LogicMonitor), or Catherine Stewart (COO at Shippo). 

HOW do you recruit, evaluate, and "sell" COO candidates?

Recruiting

Because trust is so fundamental to the partnership between CEO and COO, often the COO role is filled by an internal promotion or by an introduction from another trustworthy person, such as a mutual friend or backer of the company.

That’s problematic, though, because I think there are a ton of people out there who would be amazing COOs but for whatever reason are not "in the network" and thus "in the know" about COO opportunities. I’m a big fan of publishing roles, including the most senior roles, on company websites and social media. This will also allow you to open up your funnel to diverse candidates.

Working with headhunters is the most common path for proactive external recruiting. Most of the top exec recruiting firms have a significant COO practice. There are also some boutique search firms that specialize in COO and CRO roles. Last year I learned about a headhunter who used to focus on recruiting “professional CEOs” to replace founders but then shifted to COOs/CROs, because the same types of people are taking on this new type of role, as a result of the trends I mentioned earlier. 

Evaluating

First, test for "systems-thinking" ability. Systems thinkers are adept in understanding how the puzzle pieces fit together. They are strong at pattern recognition. You might ask candidates:

  • "How did you and your team identify the root cause of a very complex strategic problem?"

  • "Tell me about a time when you led your team to create a new framework or methodology from scratch."

Second, test to ensure that candidates can progress beyond the function that they "grew up" in, since all four types of COOs need to be able to harmonize multiple functions. Candidates' shortcomings typically vary by their historical functional focus:

  • Sales leaders sometimes are too focused on making the number this quarter and individual transactions, rather than laying the foundation to achieve long-term revenue growth and coordinating across functions to create a symphony orchestra that generates predictable revenue growth.

  • Customer success leaders have a ton of orchestration experience, but they are sometimes too focused on process or individual client relationships. Test their passion for and skills in generating revenue.

  • Marketing leaders come in all shapes and sizes, ranging from growth hackers to brand geniuses. Test them on whether they can move beyond tactics and creative endeavors into understanding how to build a revenue engine.

Third, test for leadership ability.

  • Do they wear their "CEO hat"?

    • "Describe why your past company has been successful."

    • "Describe what your company strategy is going forward."

  • Can they lead an organization through rapid change

    • "Describe how you led an organization through change to achieve a goal."

  • Do they value continuous learning -- which is critical in running a multi-function "orchestra"?

    • "What books on leadership or tech inspire you?"

Selling

You'll need to master the art of selling, since great COO candidates will have their pick of the litter. They typically want to see:

  • Breadth of responsibility, or growing breadth of responsibility over time. Chief-of-Staff types will want to know that you’ll continue to invest in them as generalists -- which usually means that they'll want to be given more problems to tackle over time. Journey Officers want to expand their functional areas beyond ones that they had previously been managing; they might be former Chief Sales Officers or Chief Customer Officers. 

  • Commitment to a true partnership, with some degree of equality: Most COO candidates won't want to be on par with other members of your exec team. They want to be your #2, and -- especially if they are coming in as a Journey Officer or Runs the Biz type -- they want to be your #1 thought partner in building the business. "Work marriage" is a term I've heard some COOs use to describe their relationship with their CEO.

  • Very strong financial opportunity. Be able to explain your growth trajectory and how that results in meaningful stock price appreciation for them, particularly if you’ve already raised a lot of money and your strike price is high, which is true for many venture-backed companies right now.

  • Halo effect around your business: Company reputation matters in our industry, sometimes even more than the numbers. It helps if you have strong brand recognition, which may come from press, formal recognition (e.g. Cloud 100 or Rising Stars), or having raised money from top-tier investors.

HOW I can help

In my new career chapter as a business-minded counterpart to product-focused founders, I often serve as a COO-type sounding board to the CEOs that I invest in. I've also helped many founders think through how to hire a COO, and I've placed a few myself. I'll make the introductions directly or else through my Opportunity Seekers Club, in which >300 SaaS executives subscribe to hear about job opportunities that cross my desk. If you're a CEO looking to hire a COO, feel free to reach out at allison.pickens@gmail.com.

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